Dentists Who Invest Podcast

Tax Strategies To Get Ahead In 2026 with Dr Barry Oulton and Shishir Khadka [CPD Available]

• Dr. James Martin • Season 4 • Episode 431

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UK Dentists: Collect your verifiable CPD for this episode here >>> https://courses.dentistswhoinvest.com/smart-money-members-club

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Tax isn’t just a bill; it’s a design problem. We sit down with dental tax expert Shishir and performance coach Dr Barry Alton to rebuild the way dentists think about money, from the timing of income to the shape of an exit. The conversation is direct, practical, and aimed at one outcome: keeping more of what you earn while building a practice that’s easier to run and more valuable to sell.

We start by fixing timing. Too many practices recognise revenue on money received, paying tax before treatment is delivered. Switching to production‑based recognition aligns tax with effort, reduces cash flow shocks, and stops the cycle of borrowing to pay HMRC. From there, we dive into a smarter extraction stack: blend salary, dividends, pensions, retained profit, and legitimate family roles to move the same profit home with less combined tax. It’s coordinated, not complicated, and it keeps working capital healthy while your household saves.

Then we flip the growth model. Scaling with post‑tax scraps is slow and costly. Using retained, pre‑tax profit to fund acquisitions and new surgeries preserves momentum and compounds returns before the final tax bite. Finally, we separate clinical income from non‑clinical value like brand, IP, education, and property. Clean books create clean EBITDA, fewer add‑backs, and stronger valuations. Buyers reward clarity, and lenders do too. Throughout, Barry shows how accurate, real‑time data enables better associate pay structures, faster decisions, and lower stress.

If you want a framework that lowers your effective rate, strengthens cash flow, and positions you for a higher multiple at exit, this is your playbook. Subscribe, share with a colleague who needs a better tax plan, and leave a review to tell us which lever you’ll optimise first.

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Disclaimer: All content on this channel is for education purposes only and does not constitute an investment recommendation or individual financial advice. For that, you should speak to a regulated, independent professional. The value of investments and the income from them can go down as well as up, so you may get back less than you invest. The views expressed on this channel may no longer be current. The information provided is not a personal recommendation for any particular investment. Tax treatment depends on individual circumstances and all tax rules may change in the future. If you are unsure about the suitability of an investment, you should speak to a regulated, independent professional. Investment figures quoted refer to simulated past performance and that past performance is not a reliable indicator of future results/performance.

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Dr James:

What's up everybody? Welcome to this line webinar with an expert on tax for dentist Mr. Mr. Sitir. A little bit of tongue twitch of the last name. Sit here is an expert attacks on Dentists. We're here to talk about everything that we can possibly do on this one to minimize our tax outgoings of possible tax efficient to that line. Do everything that we legally can in order to manage our tax position and tenants. And that's exactly what this webinar is looking forward to that. And of course, this is very topical, of course, because we're coming up to January 31st, which as we all know is a tough technique deadline. So we're going to try to wrap in as many things as possible to the evening that are real practical things that tend to use in order to manage a tax position. We're also going to be joined a little later on by Dr. Barry Oulton. He compliments what this year does very nicely because, of course, Barry's remit is more that he is an expert whenever it comes to profitability and down taxes. So of course, when you manage a tax position, that's one side of the coin, and the other side of the coin is how can we boost your income, how can we do it activate, and how can we make it more profitable. As ever, you can claim your CPD for this episode within the digital tends to invest smart money members club. Smart Money Members Club also includes multiple money courses in webmasters and how to become as tax position as possible, as well as understanding investing. All of this content comments as a verifiable CPD, and you can download your certificates there and then on the HP to Last C. In addition to this, we also include a whopping 10% discount on your dental identity and a 5% discount on lab bills for dental principles, amongst other perks and discounts for members. Please use the link in the description to claim your verifiable CPD for this episode.

Shishir:

Yeah, I'm good, thanks. And James.

Dr James:

Lovely job, lady. Okay, Shishir, well, listen, I'm not gonna hold everybody back too much, just a little tiny bit of housekeeping for everybody this evening. We will have the opportunity for Q QAs at the end. That's gonna be the last 20 minutes or so. Usually these events last about 60 minutes-ish, something along those lines. So if anybody does have any questions, feel free to pop them in the chat box and we can get to them during that section of the webinar. The other thing to mention is that there is some verifiable CPD on offer for everybody this evening. There'll be 60 minutes, which is really cool. So you can go ahead and learn how to claim that right at the end of the webinar. We're going to be announcing details on that. So Shir, if you're happy, maybe now is a good time to go ahead and jump straight in.

Shishir:

Okay, James. Um I'm happy to start. So hi everyone. Uh my name is Shishir Khadka. I'm a um I'm a charter certified accountant and by trade. And uh I work with dentists to I'm helping them to maximize profit and minimize taxes legally, of course, and uh so that um they can build generation wealth. And um before I start and uh this and uh so that I can, you know, um I can I I can uh give you some golden nuggets in terms of who you are, what you do. So could you just put like if you are a single practice owner, if you if you are a dental associate, put uh put one in the chatbot. If you are a single practice owner, put two in the chatbot. If you are if you own three to ten practices, put three in the tag chat chatbot. And if you want more than ten practices, put four in the chatbot so that I can customize the content for you so that it's more relevant to you. Could you do that now, please?

Dr James:

Yes, feel free to put that in the chat box if you can. Everybody share just what everybody's doing. That what were those again? One for associate, two for yeah.

Shishir:

So we we're going by in a chronological order, like one for associate, two for single practice owner, three for uh small groups, um three uh two to ten and four for DSOs.

Dr James:

Nice okay, so we got some numbers coming in.

Shishir:

Yeah, so we have lots of associates here and we have initial tell initial is that how I pronounce the name? Two. Um okay, so yeah, so so we have lots of ones, so so it's mostly about the associates. Okay, so um that's that's good to know. Barry's here, hi Barry.

Dr Barry:

Just got back in time to well hi chaps. Um thanks for that. The joys of the British transport system. Okay, hello everybody. Lovely of you to join us. Hi James, thanks for having us, mate. I'll let you crack on.

Shishir:

Okay, so I'm just gonna uh share my um screen. And is everybody can everybody like see my slides and uh okay? So here's what we're gonna talk about um in terms of the tax uh I call this tax architect because there are four areas of it. Okay, most of them just talk about okay, all I just minimize the taxes, and I go like where do you and when do you and at what stage are you thinking about git matters? So what we're going to do today here is like how do you reduce taxes, how to extract profit in the right way, and how can you expand by leveraging as a tax as a leveraging vehicle. Yes, we can do that. So um, like I said, my name is Siskarka, I'm a dental accountant CVO, which we stand for chief finance value officer. My only sole goal is to increase the value of a dental practice, you know. And I'm joined here by Barry Outon today and uh he's a different performance course. And uh so this master uh this master class you give you some golden uh some know-how in terms of you uh of how you leverage taxes in a business because there's only two certainty in life, and that's the way I think Benjamin Franklin said that death and taxes, right? So we know that. So, how do you man uh you know minimize that in a legal way so that uh you keep most of the money that matters? So, so here's the tax architecture that I would like to talk about, and so then how you can pay less taxes, how we keep more profit, how we can expand with pre-tax capital. And uh but and who is this master class for? Like uh, so I'm gonna get more to us associates because that's what I found. But it it is for single practice owners. If you are this watching this and uh uh at recorded time, sometime this is relevant to you. So if you're a single practice owner, if you are running small groups between two and ten practices and on DSOs as well. So here's what you need to know dentists don't have a tax problem, they have a revenue and extraction architecture problem. I'll explain this. Most tax pains don't come from tax rate because the tax rate are tax rate is the same to you and same and same for uh other sectors as well, but it comes from the architecture underneath. And uh, if you think about like an iceberg, you know, like uh most dentists operate above the waterline, the real levers are underneath. What are they? So the profit dividend taxes, this is what you see. Oh, I must be I made this much profit. I took out this dividend as drawings, or this is how much tax I paid. But the underlying levers are the timing. It matters when. For example, the m in the the tax that ends on the 5th of April. So if you if you pay yourself dividend on 5th of April, versus 6th of April, the 6th of April is going to go into the next year. The timing matters, right? An extraction method matters, the expansion method matters, and the ownership are the four dimensions that I'm going to talk about very shortly in more detail. So the four dimensions, the timing, like when actually the tax becomes payable, payable, then we lead to how profit actually reaches the owner. The third one is the what actually fonts growth, not the post-tax cash left in the business, is the pre-tax profit that you have in the business. That's what you have to leverage. And I'm going to show you exactly how. Yeah, put three if you're not sure. I would say that's even worse than okay. So I see loss of one here. Here's the problem with this. So when you're when you're paying taxes based on money received, it means that your revenues revenue sequence is wrong. And Barry, it's the same thing that when we work with the practice owners, right? So the same problem that we have, that you know, when whether you are a single practice owner or multiple practice owner or your associate, the fundamental issue is this like when you are paying taxes based on money received, that means possibly that you have not actually performed the treatment, which means that you are accelerating your earned revenue, which means that you are accelerating your profit, and as a consequence, and you are accelerating your tax you are paying, for which you shouldn't have paid. For example, Barry, when we work with one of the clients and he was doing 1.2 million, and no wonder, like uh he was doing exactly in the same paying tax in that way, and for him to pay his person tax, he had to borrow money from a Bramir loan per person tax. And then I'm like, that's diabolical. You should not be paying tax anyway, based on that, based on that. So if you are paying taxes based on money received, you're accelerating your tax DP. So absolutely.

Dr Barry:

This is um this is without a doubt. Um, this is the problem that we have come across with our practice owners. Fortunately, this is very few associates get affected by this. Um, but it's worth knowing this, firstly, as an associate, to ensure that the money that you are receiving actually is correlated to the treatment that you've done. Most associates are. But secondly, if you're ever thinking about owning your own practice, it's really important that you are financially savvy. And this is a very important point because we've had clients paying 20 plus thousand pounds extra tax that was unnecessarily paid because the work hadn't been completed.

Shishir:

Yeah, and and and and the and the and and the bigger problem with that, Barry, is that they could reinvest that 20,000, 30,000 pounds in elsewhere to mobilize money to to grow the business.

Dr Barry:

Yeah, absolutely right.

Shishir:

And and that's the opportunity cost here. So that's what we see. The most uh the default practical path that most practices they follow, they get paid by the patients and they get taxed because they made a profit. And then they realize that actually at the time of paying the taxes, uh, the the cost will like catch up. And so like there's a cash flow timing mismatch. And it's like, and and now they're stressed out. Like, I don't have money in the bank, and uh, and uh I don't understand this. I feel like I'm profitable, but was my money, right? But instead, that if you adopt a strategy path, which is not based on money earned, money received, but actually based on you performed, that means hey, you're being prudent, that's what we call it in our accounting language, and uh this whole revenue principle recognition poll is a um I forgot the RS302 or something, and uh it's been a while that I haven't visited that. But it's based on a revenue recognition policy that you based on performed, not from money received. So it's from based on production, not from collection, and you know, and and then what it means is that now you're recognizing based on your effort, and then you get paid for that, and then you get taxed. So you're paying tax on the production and and the uh and and and and the effort you're making in the business. So this way, and and there there will be less tax uh cash flow issues because the timing is is is is better for you. So that's one that's one thing. And and uh and what this means is like you have the same revenue and different tax here, but there's less tax friction. That's what we come across. And so here's what you need to remember from this dentistry is delivered over time, okay? But tax doesn't need to be rushed to the front of the queue. So it's it's a bit like the way the way I would explain to dentists is it's a bit like doing a full author case and you're charging the whitening kid first, you know, uh first. And it doesn't make to do this clinically and also doesn't make sense any financially uh uh as well. So let's move on to the the number two which is the dimension number two is the tax on extraction. So I call this wealth extraction stack because these are the stack of salary dividends, you got retail profit, you got pensions, you got family, where it's legitimate to do so, right? And uh but the default thing, uh what icon across is like there's a profit and then you pay corporation tax and then you pay dividends and then you have a person tax, and they're like, Well, that's not much money left for me at the end of the year. Whereas the the extraction is salary plus dividend plus retent plus pension for family where it's legitimate to do so, but you got to utilize pensions, but yes, there will always be a cash flow issues, like you know, uh whether you stick 5,000 a month to make 6,000 or 3,000, and and so there'll always be cash flow issues, so uh you cannot take this cash flow profit and pensions and profitability tax. You cannot take all of this into isolation. These are not like isolated decision making, they're all related because you cannot pay yourself a dividend when you go to a limited company and and uh dividend unless you you have a retained shareholder fund, so your business is we call this balance sheet positive, and you cannot, even though you have cash in the business, and the law doesn't allow you to do that. Whereas, but it might also be the case that business is profitable, you have enough uh capital uh shareholder funds, but you may not have you know cash to support uh for the working capital. So you got to look at all of things in uh in in uh as a holistic approach rather than an isolated event. And uh yes, and and with regards to family, it's uh it's if they are doing uh the genuine work and this where it's designed to do so. I I have clients saying, So see, my son is 13 years old, like can I put bring him to the payroll? Like, yeah, but what is he going to do? What is he going to do? And they and in in some boroughs you you might also have to get uh the permission from the local authority as well, and and do that. So it's case by case basis that um and and yes, there are some admin jobs and uh and things that can be done, and uh this uh this way of like what can be paid at different age uh A's like that. So we have to take that into account. But you got to look at from a holistic approach point of view, and this is where we when we start uh working with clients on that, so we we take the holistic approach and uh work out what's the best approach for for uh A versus B versus C versus D, and and and we follow that. But these are the these are the wealth extraction stack that you you need to be aware of, and uh and also thresholds that uh you need to be aware of.

Dr James:

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Shishir:

So the biggest thing to take away from this section is like uh what we come across is uh most dentists use just one channel to take money home. The wealthy ones are there using five. The same level of profit, but less combined tax, you know. So you know in a household, like if there are three adults in a household, 50,000, 50,000, 50,000, 150,000 pounds, you can extract from the business in the most tax efficient way. Right. And then let's move on to the third third dimension, which is tax and expansion, which is I call this pre-tax growth loop, because you have a profit, and then and then you retain the profit, then you want to leverage the profit, then you acquire a new new side, then you compound it, and then you you tax later. What do I mean by this? Because most dentists, what I come across is they expand through post-tax cash, because they sell a business, they have a cash in the business, and they uh and they and they want to invest that cash buying the next thing. Whereas what the strategic growth would look like is expand through pre-tax profit. And this is a bit like saying is small owners grow with post-tax money, but the the smart owners they actually grow with the pre-tax profit. And it's uh so this is how like multi-side group scale. They don't pay you like two rounds of tax before they grow. They don't. So it's the difference between uh like uh fueling the car between a road trip versus stopping every five miles. That's the way that's the way I I can explain uh in a in a in a universal way, you know. And the and the fourth dimension is like tax and ownership. So your assets and IP separation protocol that so your clinical stuff like NHS private clinical the NHS like guaranteed income private uh um you know income from um a decent active patient base and your staff and asset and security equipment and establishment things like that, then you have non-clinical things like your brand, your IP, education, property, SPV, and and uh why this why this matters? This matters because clinical income belongs to the practice, whereas the non-clinical income they don't. And why is this important? Is is because this is a strategy that private equity uses, okay? And uh because what this allows you to do, like when you when you go on to uh go to buy more practices, and uh when you have clean Ebita and and uh because when you have a dirty PL, which is like so much going on, and it gets discounted. So so when you have a clean books with a clean clear view of clinical income, non-clinical income, different entities, and and it is so clean, and and and the valuation increases automatically because there is certainty and this there's a clarity there. So I say this uh a pers overloaded with unrelated income, like a it's just like a clinical chart with 19 notes in one tooth. Unclear, messy, and undervalued. Okay, so um so so that there are lots of case studies that you know Barry and I can we can talk about here, you know, and uh with respect to everybody's time. So if we're talking about uh a um one entity, one tender practice, and what they do is no they pay uh they themselves very basic salary of 12500 and and then and take out a dividend, because that's what been told to do by the accountant. And but we when you have these four four um wealth dimensions, like uh uh from a tax point of view, like you covered, and then now you're generating your cash to grow your your business to the next entity, and the next entity using pre-tax and pre-tax and profit, and then you are also utilizing the wealth stack and you're sequencing the uh revenue so that it all compounds into making um into making uh growing a business in a bigger way, much faster, and you're actually uh building a generation wealth because you have an actual uh plan in action so that when you exit the business and uh you you've already set up in the correct way so that you have the maximum impact of getting the most out of a business. You are just using business just as a vehicle and for your personal wealth. So that's so so that's so by doing this, we have the same practice, same profit, it's just different architecture. So when you focus on the four dimensions that I share with you, and you'll be miles ahead of anybody out there. So what we have come across by doing by doing this on reference, what we come across is the effective rate from 54%, it has dropped to 28%. And we're talking about you know, when you're exiting in like two, three million something, and you know, the difference between 58 and 28 uh is quite substantial. So so so what we found out, like when you don't have this, uh when you don't have this in place, like these are the consequences. If there's no architecture, so you're gonna pay pay up more higher taxes, you know, weaker cash position, and the growth will be much slower and the lower valuation, but with the right correct architecture, that you have lower taxes, strong cash flow, faster growth, and higher valuation. So the thing is, everyone thinks, like, okay, how do I do this for the next 12 months? This isn't just about 12 months, this is about the next 12 years, you know. How um yes, so that you build up the value so that uh you exit with the highest multiple. So from here, like I'd just like to um pass on the um next to um to Barry to talk about more about this the next step.

Dr Barry:

And uh that's great, mate. You can keep the slides going if you would. Okay. Um because I'll I'll reference those. Um before we talk about possible next steps, it's probably worth us just talking about what our experience has been so far with the clients that we've been working with. I know that um you have greater experience because you've got something like 35 plus dental clients. But what I've been doing for the last few years is working with uh thousands actually of associates. And by the way, if you are an associate in this room, we are bringing probably in Q2 of this year, we'll be bringing um a fantastic piece of software for associates to be able to really understand their finances and their tax position. Um what we've been doing is working with practices, and what has come across very clearly with our practice owners is that the information they're receiving typically is inaccurate from their accounts and their accountants, typically, um, and also that the information they're receiving through their QuickBooks or their zero um is far from accurate, which means that when we are putting together our software dent pulse, we're having to help our clients to really understand that the service that they're receiving is less than ideal from their accountant. Once we've got that information correct, we've been able to help them make really well-informed business decisions. When I owned my practice, firstly, I was financially illiterate. Um, and I like most practice owners, worked realistically, I worked 18 months behind because I waited for my PL, which really came back late. I was particularly bad at submitting the information that they needed. And what we have now is on literally to the minute, accurate data, which not only takes away a lot of stress because we know exactly what our tax position is, we know exactly what we where we need to go, we can also stress test business decisions. You know, if we wanted to invest in in this, A, what is the net result? But also feeding back working with Shashir, we can figure out what we need to do financially in order to afford that. Then with my coaching, I'm able to help my clients to figure out the plan in order to get what it is that we've designed that we want. Um, more than that, it's not just reducing their stress and their worry, but it means that we also have to the minute data to allow us to make decisions like, for example, how we are looking after our associates in terms of their pay scale, is that historically choosing a percentage for a patient for a for an associate was the associate comes in and says, I want 50%. And we were led by the market and led by what we felt that we could offer, as opposed to leading with data. And so we've had some of my clients be able to sit down with their associates and say, we know exactly what it costs to open and run your surgery. We know exactly what um it's spent you're spending to run that surgery, and we know exactly what you're bringing in. In order for you to have 45%, we need your gross revenue to increase to £2,862 on average per day. And then we're able to help the associate with the solution to how they raise that gross revenue. So the information that we're gathering now is so accurate, it's so good with Dent Pulse that it's meaning that people are making much better decisions. So it's it's kind of helping on multiple layers and multiple fronts. So your next step, if this resonated with you, is number one, as an associate, you're very welcome to join us, but know that we have something up our sleeves coming up for associates in Q2. If you would like to explore this a little more, we have an offer where we are going to be running a one-day proactive tax planning day. Um, and this is going to be no compliance, no theory, just design, right? In that session, we're going to map out your architecture, timing, extraction, expansion, ownership, and we're going to identify exactly where the friction is occurring in your business. You'll walk away knowing what to change, why to change, and in what order. It's going to be a live online interactive workshop. It's not a webinar where you half watch while checking emails. You're going to be fully immersed. Um, it's going to run on Saturday, the 24th, and it's going to be approximately four hours where we're going to really guide you through. Normally it's 115 quid, but for anybody from DWI, it's 27 quid. Now it's not low value, right? Because the real value is in the implementation afterwards. It's low cost because we simply want to ensure that you turn up and you'll leave on that day after those four hours with us with a clear tax architecture framework. It's pre-end of Jan, which is really useful. Smarter profit extraction strategy. We'll have a pre-tax growth model. We'll separate clinical versus non-clinical income and we'll structure and a structure that supports retirement and exit if that's what you're looking for. So if you know you're paying too much tax, but you can't see where the leak is, this is for you. So if this feels like it may be the missing layer in your business, then we're going to give you a link to book and come and join us. It doesn't matter where you are in the country. You just need to have decent Wi-Fi because you're going to have your laptop, you're going to have your accounts, and we're going to guide you through that. We're capping spots at 50 people because we want to make sure that we're looking after you individually. There'll be no hard self-follow-up. It really is we want to just knock your socks off with what this piece of software does. And um, we want you to be able to design your future as opposed to you know living effectively in the past and working, you know, reactionary. What we'd like to do is show you that with some decent data, you can be much more proactive with what you're doing with your finances and effectively stop making the mistakes that I did, start making smart decisions like my clients are doing, and then enabling them to really drive their business forward and truly understand what their profit is.

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Dr. James Martin

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